Impact of new construction on values of existing homes in the same development (Denver: new house)

[BBurn]

We recently went under contract on a two-year-old Arvada home in a development that is still being completed. Same builder, but the new stuff is priced >$20k more than our contract price for roughly the same sqft, floor plan, unfinished basement, and yard. How does this bode for the value of the home we are buying?

[davebarnes]

Originally Posted by BBurn

How does this bode for the value of the home we are buying?

As you will be in your new house for 5+ years, no effect as the builder will be long gone.

[sbelvedere]

It means you are saving 20k by buying a used house. The land under the house will continue to appreciate as long as Denver metro does not decline economically and inflation stays positive, and that should also offset the house depreciation if the quality of materials and build is good.

Houses are depreciating assets like cars. If you can stand to by used and don't end up with a lemon that is out of warranty, then you can save good money compared to buying new. The land is the part of the transaction that is the investment, which is why good location is so important.

[billiken]

I don't think there's much to worry about currently in Denver, but the only time this would suck is if the economy falls out and the builder doesn't finish what they started, and they begin selling new homes for less than you paid. This happened in my friend's neighborhood. He was living in a neighborhood with half finished streets.

[BBurn]

The neighborhood is almost done - 10 home sites left, I believe.

[Robert5]

Originally Posted by sbelvedere

It means you are saving 20k by buying a used house.

Pretty much this. The new houses might have some superior windows or insulation that will enhance value long term, but most of the 20K premium will be lost to depreciation by the people buying the new homes.